GDP to ‘fall again' in March quarter economists, banks warn after Australia broke 21 month long per capita recession
The nation was in a per capita recession - consecutive quarters where population growth outpaced economic growth - for 21 months before the economy picked up in the December 2024 quarter.
Growth is expected to sink once again in the March quarter in the new figures from the Australian Bureau of Statistics due 11.30am.
Oxford Economics Australia lead economist Ben Udy said the consultancy firm had downgraded its GDP projection from 0.5 per cent to about 0.2 per cent after it was revealed Aussies were spending less than expected.
Mr Udy also pointed to other key data from the ABS, including government consumption, retail sales and trade, which suggested Australia could be headed back towards a per capita recession territory.
'There's no question that on a per capita basis, the activity is pretty soft at the moment,' he told SkyNews.com.au.
He added Australia was already experiencing a hit from a reduction of international students - one of the nation's major exports.
'One thing in today's trade balance of payments data was that exports of services were a little lower,' Mr Udy said.
'In particular, exports of education services suggesting reductions in student numbers may already be starting to have an effect on Australia's exports.'
It comes as student placement and English language testing business IDP Education suffered a devastating 48 per cent share price drop on Tuesday after the company forecasted its earnings would halve.
The nation's GDP slump was also a concern for Economics Unchained's principal Stephen Halmarick, who warned Australia's economy was headed back into per capita recession territory.
'It looks like the first quarter of GDP numbers are going to be pretty soft, maybe around 0.2-0.3 per cent for the quarter,' he told Sky News Business Now.
'That's slower than the fourth quarter of last year, which was 0.6 per cent. This very subdued economic environment that we've had for a number of years now (continues).
'Perhaps more importantly, the GDP per capita number is likely to fall again.
'We've seen this big decline in GDP per capita over the last two or so years. So (we're seeing) an environment where economic growth continues to be pretty modest.'
Meanwhile, the Commonwealth Bank of Australia downgraded its forecast from 0.4 per cent quarterly growth to 0.3 per cent for March.
'With population rising by 0.4 per cent (during the quarter), that indicates a soft start to 2025 after the relative strength seen at the end of last year,' a CBA report read.
Westpac predicts just 0.1 per cent quarterly growth in March, while the Organisation for Economic Co-operation and Development downgraded Australia's 2025 growth from 1.9 per cent to 1.8 per cent.
Judo Bank's chief economist Warren Hogan also predicted Aussies will see the economy has slumped in March.
'We're going to get a picture painted of a soft domestic economy,' Mr Hogan said on Tuesday.
'Consumer spending (has been) soft, business investment (has been) soft even the numbers today on government spending investment and consumption were soft.'
Australia experienced the slowest annual growth outside of the pandemic since the early 1990s recession in September when the economy grew 0.8 per cent.
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